"The Nineteenth century saw a great Springtime of Nations as the revolutions of 1848 saw new countries created the length and breadth of Europe. In our world today we are now seeing our own Spring Awakening with people and cultures that have long been dormant and subdued asserting their right to exist, their right to dream." Adam Price MP

Saturday, 23 April 2011

Scotland Shows the Way

‘Once again Wales has been outplayed by Scotland’

FINANCE Minister Jane Hutt has been accused of “sleeping on the job” after the head of Wales’ leading think tank claimed the Scottish Government had managed to fend off Treasury cuts totalling hundreds of millions of pounds that are hitting Wales.

The Assembly Government has lost £385m after Chancellor George Osborne and Chief Secretary to the Treasury Danny Alexander decided to end the arrangement under which unspent cash could be carried forward into the next financial year.

In Scotland, however, the amount lost has been restricted to £23m.

John Osmond, director of the Institute of Welsh Affairs think tank, revealed the discrepancy.

But last night Welsh Labour accused him of getting his figures wrong and maintained that the blame for Wales’ loss lay entirely with the Westminster coalition.

Mr Osmond said: “I’ve learned that once again Wales has been outplayed by Scotland.

“In the case of Scotland the loss of what is termed ‘accumulated end of year flexibility’ was limited to just £23m. How could this have happened given the much higher level of public funding, about double, that Scotland receives compared with Wales?

“The sad truth is that the Scottish Government has proved much more agile and streetwise when dealing with the Treasury and safeguarding Scottish interests.”

Over the course of the 2008-09 to 2010-11 Comprehensive Spending Review years John Swinney, the SNP’s Scottish Finance Minister, did a deal with the Treasury that reduced most of the £850m end of year flexibility stock that had existed at the start of the period.

Thanks to this initiative Scotland ended up losing only £23m when the Treasury clawed back the outstanding cash at the time of the 2011 UK Budget in March.

By the time of the beginning of the 2010-11 financial year Mr Swinney had whittled the Scottish accumulated end of year stock down from the original £850m to around £150m.

He then did a further deal with the Treasury to change the size of the Scottish Budget in 2010-11 to allow him to carry over most of the unspent resources into the current financial year. The result was to cushion the Scottish Budget against the spending cuts.

Mr Swinney finessed his deal in collaboration with Michael Moore, the Liberal Democrat Secretary of State for Scotland.

In a written answer on March 15, Mr Moore told the Westminster Parliament that the UK Government was allowing Scotland to carry forward £130m of agreed underspend from the 2010-11 financial year into the current one.

He said: “In recognition of the unique situation of the devolved administrations, the Government have allowed Scotland to carry forward £130m of agreed under spend from this year into next.”

Mr Osmond writes in a blog posting on the IWA’s website: “Note Michael Moore’s use of the plural when he referred to the devolved administrations. However, only Scotland was allowed to carry forward this spending.

“Why did the same not apply to Wales? Where were the negotiations between Welsh Finance Minister Jane Hutt and the Welsh Conservative Secretary of State Cheryl Gillan that could have led to Wales being given the same favourable treatment as Scotland?

“The answer must be that the Welsh case was not put, or if it was, ineffectively.”

On February 10 this year Ms Hutt put out a statement saying she was “extremely unhappy” that Mr Alexander was proceeding with plans to write off the Welsh Government’s £385m of unspent money.

Ms Hutt said in her statement: “This is our money voted by Parliament for Wales. It should be used to support investment in public services and in supporting the economic recovery, rather than retained by the Treasury.”

“We will continue to oppose the UK Government’s plans to take away our end of year flexibility stocks and stand up for the interests of the people of Wales.”

Mr Osmond said: “The problem with this, of course, is that Jane Hutt was attempting to close the barn door after the horse had long gone.

“She should have been following the course set by her counterpart in Scotland and begun running down the Welsh Government’s end of year stocks by diverting them into a capital fund at the start of the Comprehensive Funding Spending review period three years ago.

“Jane Hutt should also have ensured that the Wales Office and [Secretary of State for Wales] Cheryl Gillan were on side and arguing the Welsh case as strongly as was the Secretary of State for Scotland. Or is this just another example of the ineffectiveness of the Wales Office?

“As for Jane Hutt, rather than ‘standing up for the interests of the people of Wales, was she sleeping on the job?”

A Welsh Labour spokesman said: “John Osmond’s article is based on a number of assumptions that are simply incorrect. The idea that Scotland has been afforded a special deal in the handling of end of year flexibility is just not right. He has conflated EYF with the issue of in-year carry forward.”

He added: “The notion that Scotland have been somehow preparing for an EYF smash and grab from the UK Government this spring is nonsensical.” He accused the Government of “pocketing money which has been allocated to the devolved nations” and said it was unprecedented and unjustifiable.

He said: “Wales particularly is underfunded, as clearly identified by the Holtham Commission, and the removal of EYF is indeed harsh.”

A Treasury spokesman said: “The Government’s priority is to deal with the deficit, the nation’s credit card. The End Year Flexibility system led to accumulated stocks of around £20bn which would further increase the deficit if they were spent.”